I spent the last hour reading about landlord-ing, but I still don't have a good feel for my own situation.
I have a nice (old) $100k house, and am moving 14 hours away. My father in-law (single) has been living with us, and would like to continue to live in the house, and possibly invite his parents to stay there too. I feel like I have a good property and a stable tenant/buyer, and should look into landlording instead of selling the house and kicking family out on the curb. I don't have much interest in becoming a full time landlord and building an empire as some of you have done. If he ever moves on, I'd put the place up for sale in a heartbeat.
He'd like to buy it from us, but doesn't have enough money for a down payment (without plundering the last of his 401k, which I've advised him not to do) and has questionable credit after a medical-related bankruptcy. I don't have the cash flow to sell it to him with owner financing. His budget can handle payments of up to $700/month, and he's had a steady job for 20+ years.
I have 28% equity and pay $810 a month in mortage, property tax, and insurance. As a landlord, my property tax would increase by $50/month, and my insurance would probably cost more too. I anticipate my total monthly cost of ownership would be about $155 interest + 250 tax + 50 insurance = $450 before maintenance, and the opportunity cost of not investing my equity in Vanguard.
- Do I need to inform my mortgage company that I no longer reside in the home? Will that raise my rates or force me to refinance the home?
- Am I in a good position to rent the house to him? It seems like $650-700/mo would cover my costs, but not leave enough left over for him to work towards owning the property.
- Could a rental agreement make him responsible for maintenance? Can I employ him as the property manager while he lives there? He already does all of our home maintenance now, while we're living together.
- Do any of the answers above change if we have a rent-to-own contract?
Thanks!